Singapore Exchange (SGX) (SGXL.SI) said on Friday it would launch trade in a new robusta coffee futures contract on April 22 to capitalise on Southeast Asia's top market status for the commodity. 

 

“The launch of SICOM Coffee is timely, as Southeast Asia has grown to become the largest producer and exporter of robusta coffee,” said Jeremy Ang, CEO of the Singapore Commodity Exchange (SICOM), a unit of SGX. 

 

“SICOM Coffee is set to play a key role in establishing an Asian benchmark price for robusta coffee," he said in a statement. 

 

London robusta futures are currently the benchmark for robusta coffee, which is mainly produced by Vietnam. SICOM Coffee, however, is a physical delivery futures contract traded in five metric tonnes per lot of robustas. 

 

Robusta is either blended with arabica beans for a lower-cost brewed coffee or processed into instant coffee.  

 

Delivery will be made via warehouse receipts representing coffee stored in bonded warehouses in Ho Chi Minh City in Vietnam or Singapore, said the exchange, adding that trading hours are from 10 am to 12 noon (0200 to 0400 GMT) and from 4 pm to 11 pm (0800 to 1500 GMT). 

 

“This simple and efficient delivery mechanism provides for a short delivery period and simplified logistics,” it said.   SICOM had said it planned to launch coffee and gold contracts in the first half of 2010. 

 

London’s May robustas (LRCK0) gained US$19 to finish at US$1,267 ($1,768) per tonne on Thursday. It tumbled to contract low of US$1,212 on Monday due to a firmer U.S. dollar. 

 

Worries about supply could support coffee and cocoa this year but the outlook for sugar was bearish, with more sweetener expected to emerge from Brazil and Europe, Standard Chartered Plc (STAN.L) said.